Editor’s note:The author of this post is a fellow at CodeX: The Stanford Center for Legal Informatics and is a member of the California bar.
By Monica Bay, Fellow, CodeX: The Stanford Center for Legal Informatics
“I am very bullish about the future of Big Law — clients don’t have other options,” said Aric Press, former editor of The American Lawyer, at the opening keynote at the Private Law Librarians & Information Professionals Summit 2015 in Philadelphia on July 18. “The future of both the business and practice of law is quite bright.”
But Press had plenty of caveats to his pronouncement.
Now a consultant at New York-based Bernero & Press, he has been monitoring the top global firms for 17 years. Big Law, he said, is a $255 billion market. But top firms are facing challenging times, he warned the audience of about 225 legal professionals. “The era of reliable, surging growth is over — for now.”
StakeholdersOne of the biggest changes that might not even be noticed by casual observer is that the number of Big Law stakeholders is growing smaller and smaller. Just because a lawyer is a partner doesn’t mean that she or he has a real piece of the the shop. Last year, 53 percent of top law firms were “de-equitizing” partners and 85 percent asked partners to leave, said Press, who was senior vice president and editor in chief at ALM from 2010-2014. Meanwhile, non-equity partners have surged.
Today’s partners are not reluctant to move to other firms, he said. In 2004, there were 10,174 (12 percent) non-equity partners in the AmLaw 200; in 2013, 18,115 (17 percent) (excluding vereins.)
In 2012 through 2013, about 4,500 partners left for other firms, with a handful going to corporate or government. Today’s young people, said Press, “know that tenure is a thing of the past.”
“Never have so many worked so hard to benefit so few,” he said, making a play on Winston Churchill’s famous quote.
Legal Spending A first glimpse at legal spending may look like Big Law revenue is recovering nicely from the 2008 recession ($168.7 billion in 2013), Press observed. But if that revenue is adjusted by inflation, it’s more like $118.3 billion — as in flat since 2010. Big Law had 66 percent of U.S. legal spending in 2004; that has stabilized at 53 percent for the last three reports (2011-2013), he noted.
The Rise of Corporate CounselPress cited Ben Heineman Jr. as a “difference maker” for corporate counsel when Heineman decided to work as senior vice president-general counsel of General Electric (he’s now a senior fellow at Harvard Law School’s Program on the Legal Profession and Program on Corporate Corporate Governance, among other engagements).
Heineman served as GE’s senior vice president—general counsel from 1987-2001, and revamped the company’s legal operation, creating process improvements, capitalizing on the company’s buying power, mastering data and even running auctions. “It was a major status upgrade (for corporate lawyers)” said Press, who also serves as an adjunct professor, Master’s Program in Law Firm Management, at The George Washington University.
Press won’t call Heineman’s approach a “revolution.” Instead, he said its a “rational response to match lawyers with tasks” — a client-driven change in how Big Law works.
Not AloneBig Law, said Press, is no longer alone in serving clients with legal needs, he warns. Accountants, outsourcing companies, work quality/process movement and machines are also looking to take a bite out of Big Law’s turf. As examples, he cited Axiom, which offers tech-enabled legal services. As for IBM Watson, can it get from being a very interesting research tool to artificial intelligence?
Press also urged the audience to be mindful of the lessons preached in two iconic books: Clayton Christensen’s iconic Innovator’s Dilemma and Atul Gawande’s The Checklist Manifesto.
Innovative Librarians“Overall, Big Law firms have not been disrupted, but law librarians have,” Press said, acknowledging how librarians have embraced technology to help them serve firms’ needs with limited budgets and staff. “Law librarians are a notable exception to the lack of disruption in the legal market,” said Press. “You are to be congratulated for navigating really difficult times in the industry.”
Advice for Big LawAmong Press’ suggestions:
• Every law firm needs to understand its clients better. • Not all law firms should try to be everything to all clients. • Virtually every firm claims to be a global firm, this is nonsense. • Does your firm have the talent and services to meet client needs? • Do we know why our clients hire us — and why they don’t?
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